Correlation Between Park Ohio and Tesla
Can any of the company-specific risk be diversified away by investing in both Park Ohio and Tesla at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Park Ohio and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Ohio Holdings and Tesla Inc, you can compare the effects of market volatilities on Park Ohio and Tesla and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Park Ohio with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and Tesla.
Diversification Opportunities for Park Ohio and Tesla
Very poor diversification
The 3 months correlation between Park and Tesla is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Park Ohio is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Park Ohio Holdings are associated (or correlated) with Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Park Ohio i.e., Park Ohio and Tesla go up and down completely randomly.
Pair Corralation between Park Ohio and Tesla
Given the investment horizon of 90 days Park Ohio is expected to generate 4.02 times less return on investment than Tesla. But when comparing it to its historical volatility, Park Ohio Holdings is 1.87 times less risky than Tesla. It trades about 0.09 of its potential returns per unit of risk. Tesla Inc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 21,060 in Tesla Inc on September 2, 2024 and sell it today you would earn a total of 13,456 from holding Tesla Inc or generate 63.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Ohio Holdings vs. Tesla Inc
Performance |
| Timeline |
| Park Ohio Holdings |
| Tesla Inc |
Park Ohio and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Ohio and Tesla
The main advantage of trading using opposite Park Ohio and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Ohio position performs unexpectedly, Tesla can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tesla will offset losses from the drop in Tesla's long position.| Park Ohio vs. Hurco Companies | Park Ohio vs. Enerpac Tool Group | Park Ohio vs. China Yuchai International | Park Ohio vs. Luxfer Holdings PLC |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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